Cummins Announces Strong First Quarter Results; Raises Full Year Profit Outlook

Cummins, Inc.

COLUMBUS, Ind. — Cummins, Inc. (CMI) today reported results for the first quarter of 2019.

First quarter revenues of $6.0 billion increased 8 percent from the same quarter in 2018. Increased truck production in North America and stronger demand in global construction and North American power generation markets drove the majority of the revenue increase. Currency negatively impacted revenues by 2 percent, primarily due to a stronger U.S. dollar.

First quarter sales in North America improved by 13 percent, while international revenues increased by 1 percent.

“The company shipped a record number of truck engines in North America during the first quarter,” said Chairman and CEO Tom Linebarger. “Our market-leading position in this region reflects our close partnerships with our customers who rely on us to provide a broad range of power solutions for their needs.”

Earnings before interest, taxes, depreciation and amortization (EBITDA) in the first quarter were a record $1.0 billion, or 17.2 percent of sales, compared to $700 million or 12.6 percent of sales a year ago. First quarter results include a non-segment and non-taxable gain of $37 million ($0.23 per diluted share) related to the mark to market impact on assets related to our nonqualified benefit plans.

Net income attributable to Cummins in the first quarter was $663 million ($4.20 per diluted share), compared to net income of $325 million ($1.96 per diluted share), or $403 million ($2.43 per diluted share) excluding the impact of tax legislation in the first quarter of 2018.

“We achieved record EBITDA in the first quarter while also celebrating our 100th anniversary,” Linebarger said. “We are on track to deliver record results for the year and return significant capital to investors, and will continue to invest across our broad portfolio to power a strong future for our stakeholders.”

2019 Outlook:

Based on the current forecast, Cummins is maintaining its 2019 revenue guidance of flat to up 4 percent driven, primarily by increased demand in North America on-highway markets. EBITDA is expected to be in the range of 16.25 percent to 16.75 percent of sales, an increase from the prior range of 15.75 percent to 16.25 percent of sales, primarily due to lower projected material costs. The company expects to return 75 percent of operating cash flow to shareholders in 2019, in the form of dividends and share repurchases.

Our outlook does not include any potential impact of the company’s recently announced review of its emission certification process and compliance with emissions standards.

First Quarter 2019 Highlights:

  • Cummins was named to Ethisphere’s list of the World’s Most Ethical Companies for a 12th consecutive year.
  • Barron’s magazine announced that Cummins made its 100 Most Sustainable Companies list, moving from No. 60 in its inaugural ranking in 2018 to No. 14 in its 2019 list.
  • The Human Rights Campaign (HRC) announced that Cummins received a perfect score for a 14th consecutive year in its Corporate Equality Index.
  • Amtrak announced that it will be purchasing 75 Charger locomotives for delivery starting in 2021 which will use Cummins’ QSK95 Tier 4 engine systems to help deliver clean, efficient power for passenger trains.

1 Generally Accepted Accounting Principles

First quarter 2019 detail (all comparisons to same period in 2018)

Engine Segment

  • Sales—$2.7 billion, up 8 percent
  • Segment EBITDA—$438 million, or 16.5 percent of sales, compared to $286 million or 11.7 percent of sales
  • On-highway revenues increased 9 percent and off-highway revenues increased 6 percent primarily due to increased demand in North America truck and global construction markets

Distribution Segment

  • Sales—$2.0 billion, up 8 percent
  • Segment EBITDA—$171 million, or 8.5 percent of sales, compared to $123 million or 6.6 percent of sales
  • Revenues in North America increased by 10 percent and international sales grew by 4 percent
  • Strong demand across all product lines in North America, especially data centers, was partially offset by the unfavorable impact from a stronger U.S. dollar, which impacted sales by 2 percent

Components Segment

  • Sales—$1.9 billion, up 6 percent
  • Segment EBITDA—$325 million, or 17.5 percent of sales, compared to $227 million or 12.9 percent of sales
  • Revenues in North America increased by 17 percent due to higher heavy and medium-duty truck production while international sales declined by 8 percent

Power Systems Segment

  • Sales—$1.1 billion, flat versus prior year
  • Segment EBITDA—$138 million, or 12.8 percent of sales, compared to $142 million, or 13.2 percent of sales
  • Industrial revenues increased 1 percent while power generation revenues decreased 1 percent

Electrified Power Segment

  • Sales—$3 million
  • Segment EBITDA loss—$29 million

About Cummins, Inc.

Cummins, Inc., a global technology leader, is a corporation of complementary business segments designing, manufacturing, distributing and servicing a broad portfolio of power solutions. The company’s products range from diesel and natural gas engines to hybrid and electric platforms, as well as related technologies, including transmissions, battery systems, fuel systems, controls, air handling, filtration, emission solutions and electrical power generation systems.

Headquartered in Columbus, Indiana (U.S.), since its founding in 1919, Cummins employs approximately 62,600 people committed to powering a more prosperous world through three global corporate responsibility priorities critical to healthy communities: education, environment and equality of opportunity. Cummins serves customers in approximately 190 countries and territories through a network of approximately 600 company-owned and independent distributor locations, and over 7,600 dealer locations. In 2018, the company earned about $2.1 billion on sales of $23.8 billion. See how Cummins is powering a world that’s Always On by accessing news releases and more information at https://www.cummins.com/always-on. Follow Cummins on Twitter at www.twitter.com/cummins and on YouTube at www.youtube.com/cumminsinc.